Nike Pricing Strategy


Two university students, Philip Knight and Bill Bowerman in the Early 1964, founded Blue Ribbon Sports, a company that later changed its name to Nike, Inc. in 1978. The company trades mainly in sportswear and equipments. From its humble beginnings, the company has grown to become the leading sports label in the entire universe (Nike, 2012). Initially, the company only operated in the United States of America. At the present moment, it is operating in over 160 different countries. It has employed over 30,000 individuals directly who operate in the six continents of the world. The company also has a wide variety of products including Nike shoes. This paper shall therefore focus on Nike shoes and determine the best pricing strategy that the company can use to increase the sale of the product and to reach out to even wider markets.

Pricing Strategy

Price is an essential factor and acts as an essential element in market mix operations. Pricing is thus a key feature in strategic planning (Rodman, 2006). Price also determines other factors of the product such as quality, features and channel decision. Therefore, for Nike to ensure that they receive maximum benefits from the sale of their shoes, they need to come up with an effective pricing strategy that will enable them achieve their goals and objectives.

When setting up the price of its shoes, Nike will need to consider several factors. These factors will determine the level at which the price of their shoes will be based upon. First, it will be essential for the company to define its product. To achieve this, Nike will have to conduct a market mix analysis where they will define their product (shoes), possible distribution channels and the promotion mechanisms that they may put in place to increase the popularity of their products (Nike shoes).

The company should also conduct an environmental analysis in order to fully understand the market in terms of their target group, competitors, availability of substitutes and any legal implications. They should also develop a pricing objective. Here, their price may be based on profit maximization, increase in revenue or to stabilize their price. One this has been done, the company should now develop the most appropriate pricing structure (Kim, 2000).

While determining to set the price of their shoes, Nike has two different options from which it can base its price. The company can set the price of its shoes from market based pricing approach or a cost based pricing approach (Kim, 2000). I believe that the best way Nike can price its shoes is by using the market based pricing approach. Here, the price of the shoes shall be determined by market forces. The company would have a clear understanding of its target market, their purchasing power, their tastes, preferences and buying trends. The company shall also be aware of their competitors’ actions. This will enable Nike to set a price that will put it at a competitive edge over its rivals.

Once this has been done, the company will try to manufacture the shoes at a cost that will match their selling price. Here, the company should embark on cost minimization strategies such as outsourcing and offshoring. As a result, the company will be able to produce high quality shoes at an affordable price to its target market.


Nike is one of the renowned sportswear companies in the world. In this respect, it is facing a lot of competition from its rivals. Therefore, to be sustainable and profitable in the market, the company needs to come up with a strategic pricing mechanism for its shoes in order to have a competitive edge over its rivals and satisfy the needs of its customers.


Kim, E. (2000). Strategic Analysis of Nike, Inc. Chicago, IL. DePau University.

Nike (2012). Worlds Leading Athletic Brand. Web.

Rodman, T. (2006). Market Planning and Analysis. New York: Sage.

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